Over-the-counter (OTC) derivative products, such as negotiable financial instruments, generally refer to custom-tailored, negotiated contracts such as, for example, derivatives of stocks, commodities, securities, interest rates, indices, futures and forwards, options and foreign currencies which are bought and sold directly between parties. Transactions related to these financial instruments may be considered over the counter since they are not exchange traded and the instruments are not generally exchange listed. Over-the-counter OTC financial products may be negotiated or otherwise defined to address the needs and desires of the parties in an attempt to mitigate their individual exposure or liability to risk, or in an effort to maximize or control their individual cash-flows.
Regardless of the objective, an exchange of over-the-counter products, like entrance into any contract, processing of the transaction, and post-transaction administration, may require the parties to expend substantial effort and resources to monitor and ensure compliance throughout the life term of the contract or product. Depending upon the duration, complexity and number of contracts or over-the-counter products within a party's portfolio, this monitoring may be complicated and require a great deal of substantial effort.
It would be desirable to provide processes and methods for monitoring, managing and clearing custom-tailored contracts or over-the-counter financial products.